An excerpt from Linking Mission to Money.
Chapter 13 pp. 52-53 "Four Priorities for Regular Board Discussion"

The combination of effective reporting by the staff and probing questioning by the board is the best method to keep on top of the budget during the year and to make sure that emerging problems are flagged without your having to get involved in operational micromanagement. Now it's time to talk about the most important items you need to stay on top of if you are to fulfill your role as a board member.

Remember, your job is to make sure of four things:
  1. Your top priorities and initiatives are a major focus of the executive director's time and attention.
  2. Key activities or initiatives in the budget are occurring in the way and on the schedule that the budget anticipated.
  3. What bills have been received but not paid by the end of the month (payables), including payroll taxes, unemployment insurance, workers compensation, and retirement contributions that are owed.
  4. How much cash you have available now and for the next few months, and what major events could possibly occur in the coming months to make you unable to pay future bills on time (including payment to you of major pledges, grants, and other "receivables").
These four points represent the source of most organizational failures, yet they are relatively easy to track. It may be hard to believe that your job can boil down to so few things, or that you need to pay less attention to all the other things, so let's delve a bit deeper.

To begin with, the disruptions of everyday management can easily distract staff and board from their mission and the priorities designated by the board to achieve that mission. But the board-by its more periodic and strategic attention to the organization-can in many circumstances be better equipped to maintain focus on priorities than the operationally focused staff.

Next, slippage of key programs or initiatives can harm constituents, mislead donors, violate grant requirements, or erode goodwill. There is always a reason for something to slip. The board needs to be on top of this so that remediation can occur and course corrections can be made. If the staff is overcommitted, the board needs to recognize this and rearrange priorities and commitments in a way that is positive and helps the staff to keep the highest priorities on track.

The third point illustrates that juggling is the name of the game in daily management. But juggling, however well intentioned, can go too far. A well-intentioned but disastrous example of juggling is the gradual putting off of paying some bills in order to pay more pressing bills: the payroll is paid but the withholding taxes don't get sent to the IRS; the screaming vendor gets paid but the insurance premium doesn't, and so on. And while the board shouldn't micromanage, the financial report should routinely include how many and which bills weren't paid at the end of each month (payables) and how long those bills have remained unpaid ("aged payables"). This list most often will not be large, but it is critical for the board to be sure that the list isn't growing from month to month and that the organization isn't being put at risk by any of the delayed payments. If either situation is occurring, stop the meeting and have a calm, reasoned discussion of how and when these payments are going to get back on track. You may have to conclude that some activities-maybe even some of your top priorities-need to be canceled or scaled back in order to allow you to catch up or stay current with your bills.

Lastly, the fourth objective points to the tripwire of crisis: running out of cash. Every month the financial report should include a narrative and some key numbers so you know the amount of cash that is readily available and are able to have a discussion with staff to identify possible future events that could potentially jeopardize your operations.